Treasury yields hitting 5% may not break markets now — but the clock is ticking

The 10-year Treasury yield hit its highest level since 2007 on Tuesday, pushing borrowing costs deeper into territory that could expose some of the financial system's weakest links. The question for investors is increasingly not whether a 5%-plus yield causes something to break immediately, but where the strain will emerge if rates stay there, industry veterans said. Market experts echoed that a 5%-plus benchmark yield will expose vulnerabilities gradually, as higher borrowing costs work their way through housing, commercial real estate and heavily indebted companies. The biggest danger comes if rates stay elevated long enough to force borrowers that loaded up on cheap debt during the zero-rate era to refinance at sharply higher costs.